Snapping back at Big Plastic

Cyclesmith co-owner Paul Shaw: “There’s a general creep in user rates and fees all the time.” (TIM KROCHAK/ Staff)

A Halifax bicycle shop owner is getting another reason to encourage customers to pay by debit, not credit.

Paul Shaw, co-owner of Cyclesmith, recently found out MasterCard is planning to increase its fee for credit card transactions by 20 per cent, effective July 1.

“There’s a general creep in user rates and fees all the time,” Shaw said in an interview Friday.

MasterCard’s move follows on the heels of Visa’s similar announcement in the fall.

The Quinpool Road bike shop has a sign posted at the cash register asking customers to consider paying by debit because of the high cost of credit card fees.

“Many people look at it,” Shaw said of the notice, which is part of a national campaign by small businesses.

“Then we explain that those Air Miles you get aren’t free.”

Credit card fees, which amount to about 2.5 per cent of each sale, cost Cyclesmith thousands of dollars a year, Shaw said.

Debit charges, in comparison, are eight to 10 cents per transaction, he said.

The Cyclesmith co-owner said the sign has influenced customers’ payment habits over the past year and a half.

“Some people, they will actually switch cards,” he said. “It has made a difference in our bottom line.”

The Canadian Federation of Independent Business, which is behind the sign campaign, says its members can’t afford more fee hikes.

“Not a nice New Year’s surprise for small firms, that’s for sure,” Dan Kelly, the federation’s president and CEO, said of MasterCard’s announcement.

“We’ve seen successive rounds of fee increases out of Visa and MasterCard.”

The federation, which represents more than 100,000 merchants, says credit card fees have cost businesses about $5 billion. The charges wind up being passed on to consumers through higher prices.

Kelly said the credit card giants are increasing their charges in advance of a Competition Bureau tribunal ruling that’s expected at any time.

The ruling could result in businesses being able to levy surcharges on customers who pay by credit card. Merchants might also be allowed to start rejecting so-called premium cards, which have higher fees.

MasterCard Canada said in a statement that it’s always working to balance the payment network and ensure that all parties pay their fair share.

“We have and will continue to work with our issuer and merchant partners to deliver new payment technologies and solutions like PayPass, EMV, mobile and e-commerce that deliver consumers a valuable purchasing experience,” the statement said.